|Home - CEO Spotlight - Feb 03 Issue
CEO Profile: Glen Meakem, FreeMarkets
By Angel Mehta, Managing Director, Sterling-Hoffman Management Consultants
As of February 2003, Glen Meakem’s formal title is ‘Chairman’; in the weeks following this interview,he ceded the CEO title to Dave McCormick. But no one denies the impact of his hyper-intense personality on the FreeMarkets culture. As one FreeMarkets executive explained, “Glen is FreeMarkets – FreeMarkets is Glen.” Like many tech entrepreneurs in the 90’s, Meakem setout to change the world with a revolutionary idea. But unlike most, he actually did it. With revenues approaching $200m, FreeMarkets seems to have done what seemed impossible post-bubble: make ‘B2B’ look good. Sterling-Hoffman’s Managing Director Angel Mehta spoke to Glen Meakem in January:
Angel Mehta: So, tell me what the challenges have been for FreeMarkets this year and what will they be going forward? What keeps you up at night?
Glen Meakem: Our key challenges revolve around the fact that we have moved dramatically from a couple of products and services a year ago to really being a multi-product and service company. Three years ago, we were a single offering company with our FullSource offering. This time last year, we were a dual product service company. We had our FreeMarkets QS product and our FullSource service, had our asset business and a few other smaller things. This year, we’ve launched our FreeMarkets ES supply management solution for companies.
FreeMarkets QS, our negotiation application, continues to grow very very rapidly. FullSource continues to be a key driver of our revenues and a key service that many of our large companies use. We also introduced our Savings Implementation solution, which is has softwareand a service component to it. We also introduced our ‘Spend Visibility solution which, again, is software with supporting services. We’ve become a multi-product and multi-service company in a very dramatic way this year and the challenges involved in this include dramatically scaling our product management, product development capabilities, supporting different customers and educating our sales force. There’s a whole bunch of issues as you scale out that have to be solved and we’ve been working hard on those.
Angel Mehta: Tell me what the primary driver of all those offerings has been. Is this because you found that your existing product lines were not able to fuel the revenue growth you needed? In other words, has the market demand for each of your legacy product lines tapered off?
Glen Meakem: Companies that are providing services to large corporate Global 2000 organizations are feeling economic pressure and companies that are providing software are feeling economic pressure. As you reach our stage, a medium size company…a publicly traded company, its part of the natural evolution of things to really explore and build out capabilities based on customer needs within your space for growth. I think that need for growth is extenuated during a period of economic downturn but it’s also a natural part of our stage of life. We’ve got almost 1,100 employees around the world, we’ve got a lot of scale; we can do a lot of things at once.
Angel Mehta: How has the competitive landscape changed? Presumably just by virtue of the fact that you folks are still alive when the shake out killed so many must be beneficial, right?…
Glen Meakem: The shake out is still killing. The creative destruction of capitalism has never been better but we are seeing irrational competition. We’re seeing people who are so desperate right now that they’re irrational in the marketplace which hurts everybody too.
Angel Mehta: What do you mean ‘irrational competition’?
Glen Meakem: Dropping pricing well below cost - things like that.
Angel Mehta: Reverse auctioning, at least at a high level, seems like a no-brainer to implement. So out of curiosity what are the barriers to closing deals? If it’s not between you and the competitor, do customers have objections to the concept? Are you still educating the marketplace?
Glen Meakem: First, We’re so much broader than reverse auctioning. I mean, reverse auctioning is just one little piece of our software. We are helping companies around the world find, screen, develop and do business with suppliers all over the world. We have many many tens of different auctioning or negotiation formats that’s just one piece of sourcing. When you talk about ‘spend visibility’ you’re talking about analyzing a company’s whole spend…all their supply relationships to figure out how to cut the costs of their supply. There’s a heavy duty analytical information software component to that and there’s also a big service component to that.
When you talk about things like ‘specification management’, which we have imbedded in our latest version of software…how do you manage technical drawings, millions of technical drawings, across all the different business units you have or all the different engineering systems you have? How does a buying organization, a sourcing organization even start to pull together that technical information to give it to a new potential supplier who they may want to do business with? Think about THAT information challenge. It’s SO much more than reverse auctions and that’s why we’re so valuable to companies . We’re helping them really fundamentally improve how they manage suppliers and how they manage supply. How they find suppliers, how they screen and track the performance of suppliers, how they negotiate with suppliers and choose suppliers. How they collaborate with them and communicate with them over time. It’s a very very broad set of supply management capability on a global basis.
Angel Mehta: Does that, then, put you in A.T. Kearney’s backyard so to speak? Would you still define yourself as a software company?
Glen Meakem: You can’t even begin to manage an engineering drawing without software. You can’t even begin to do spend analysis without software. We have a whole suite of software that starts with spend analysis and goes through things like specification management, RFX, “Request for Quote”, Request for Proposal, Request for Information and Management all kinds of collaboration around negotiation including auctions. Then how you make implementation decisions and how you manage contracts so we have a whole suite of software that our customers use that cuts across all those dimensions of supply management. Yes, we provide services on top of those services. We’re very unique in that we’re both the software company and a service company and we always have been both since 1995; it’s in our DNA. We’re just a different animal and we’re the animal that the marketplace wants, we’re what customers need to get reduced costs, reduce the risks in our supply chains and just do better business.
Angel Mehta: You’re one of the rare stories of a founder who has remained involved at the helm long after the company has gone off the ground.
What’s been different about you that allowed you to stay at the helm that way, especially with the high-powered Board and everything like that? I mean, you would think the investors would have come in and say, “We want to put in a brand name candidate from wherever?” Tell me about that.
Glen Meakem: When was the last time some outside brand name candidate actually created a great company?
Angel Mehta: I have no idea, but…
Glen Meakem: Exactly. I mean, was Michael Dell a marquis name before he built Dell? I know these guys have built much bigger companies than me. But, was Bill Gates a marquis name when he was 19 years old? Was Sam Walton a marquis name? Was Scott McNealy a marquis name?
Angel Mehta: I agree, there are unique cases. But silicon valley wisdom still dictates that outside CEO’s are generally required to help the entrepreneur scale. Tell me what allows people like you to continue whereas other founders flounder?
Glen Meakem: I think the founders who flounder are usually the companies who fail. Name me a company that had a founder who flamed out within three years that’s been successful and stayed around.